Shall we watch Psion (PON)?

[Riz]

Psion, maker of the eponymous handheld computer announced its full-year results and a major restructuring of the group on thursday...the PC modem, digital radio and palmtop computer businesses are grouping under a single umbrella as Psion Digital Solutions, shedding 100 jobs...last year's acquisition, The Teklogix division will be integrated with the handheld, card modem and digital radio businesses... efforts to bring a smartphone to the market this year are stopped as Motorola pulled out of the ODIN..

The market reacted by reducing the share price by 25% on the back of the news...some analysts believe PON can drift further lower for the negative sentiment in the technology sector, a slowdown in IT spending in the US, and more pain to come from the restructuring...

The question now is whether PON is undervalued at the current price of 124.25 with a market capitalization of 492.513 falling from £5.6bn...

Well most analysts value PON's 28% share at Symbian at around 500m which means the current share is not even at the value of Symbian...PSION's core business however is valued by analysts at around 420m...adding this to 500m of its Symbian share gives us a sum of the parts valuation of £920m...that makes 230p per share...

PON is obviously undervalued at the current price in other words this is a wrong price...

If PSION announces further Symbian licencees at The CeBIT Trade show in Hanover which begins on 22nd March, we may witness the start of a revaluation..

Having said this I must draw your attention to the current unpredictably negative sentiment on the tech sector and the market's being cruel to almost any tech share...at the moment there is no logic in hammering tech shares just as there was non when hyping them..therefore in the short run PON might drift even lower, still for the reason explained above I thing PON is well worth to watch...

As for me, I lost twice on PON recently only took the risk and got in with a big stake on thursday at 102 and am making profit at the moment covering the previous loss...I'll hold them for a while but watching very carefully...

(no financial advice intended)

rizgar

 

[shelman]

I can't see you going wrong on this one Riz...just keep that stop tight.
Typically i missed that intraday low you got but i've had a small dabble...could be worth tucking away for longer term if that's ones strategy.
Steve

 

[Riz]

Moved in the right direction today..up +13.75 (11.1%) to 138...here is me hoping for more...

Riz

 

[Riz]

Retraced today -4 (-2.9%) to 134..let's see if it can hold over 130..

Riz

 

[shelman]

I remember one of the reasons for PONs original profit warning was the $ / £ exchange rate, if the dollar falls when the inevitable rate cuts occur PON may benefit.
Steve

 

[Riz]

Good point, Steve..yes it was mentioned as one reason...

Riz

 

[Riz]

Amid profits warnings by CSCO, HAND, PALM and Philips Electronics PON fell all the way to 76.5 forming year low there...from that point the price recovered to 115 then down to 105...I managed to get in at 82 and still holding...interesting comments from Reuters:

LONDON, April 17 (Reuters) -Hand held computer maker Psion Plc was among the biggest losers in the FTSE 250 index of UK midcap stocks on Tuesday, weighed down by weakness in telecom equipment stocks across Europe, analysts and dealers said.

Psion -- which has been pummelled to a fraction of peaks above 1,500p set a year ago -- traded 11-3/4 pence or 11 percent lower at 94-1/2p by 1204 GMT, as telecom stocks were hit by a profit warning from Internet gear maker Cisco Systems (CSCO).

Analysts played down the impact of negative news from rival U.S. hand held computer makers, with Handspring Inc. (HAND) cutting its sales outlook following price cuts by Palm Inc. (PALM).

Psion's move into corporate wireless networking systems means its prospects are more tied up with this area than the handheld computers with which it first rose to fame, analysts pointed out.

With tech stocks also hit by disappointing results from consumer electronics group Philips Electronics NV (PHG.AS), Psion shares fell to not far from a 2-1/2 year low of 76-1/4p set earlier in the month.

Yet some analysts said Psion had fallen to levels that made its shares look interesting.

"The question for investors is not whether there is value there but when that value is going to be released," said Ian Burgess at Psion's broker Credit Suisse First Boston, who said the stock looked attractive for longer-term investors

Riz

 

[Riz]

PON has been up for the last 5 trading days from 91 to 107...with an increasing volume..5.1m today(recent av. 1 to 2 millions)...chart shaping up nicely..both stochastics ticking up with K crossing D...OBV and MFI sharply up..RSI being sharply up for the last few days got flat today...

It appears that Investors Chronicle are advising immediate buy: "Psion, despite its problems and increasing lack of ambition, is undervalued by around 50% and (we) rate it an immediate buy."

I hold 2 long positions and hoping pon to award me by going further up...

I wonder if anyone with access to I.C. site can post full details of their coverage here..

Riz

(No financial advice intended)

 

[ChartMan]

Looks good to me- intraday found resistance turning to support at 106 and tested that twiceat the end of the day. I like The CCI formation over the last few days.Peaks followed by troughs, and then a break to the upside from each trough.

 

[shelman]

Hi Riz
You wont be surprised when i tell you i closed all my perceived longer term holdings including PON @ 102
The profit, especially on LOG and MONI was too good not to take. I am not sure if the so called fools rally will indeed collapse back to what was possibly the bottom but i'm sure there will be some level of pullback and the shorters will have another field day. With that in mind any share no matter how good on TA etc could get hammered.
Obviously i now want a pullback to occur for my sake.
Whatever the outcome i'm sure you will make the right decision.
Good luck

Steve

 

[shelman]

Good call you two...well done

Psion : Q1 sales ahead
04/05/2001 11:04:41


CE's AGM statement (extracts):

Sales for the first quarter of the year
are significantly ahead of the prior
year for the enlarged Group and the
balance sheet is strong.

Trading in Psion Teklogix - now Psion's
largest operating division following
the acquisition and integration of
Teklogix International - is on track.

While risk in North American markets
has increased with cutbacks in capital
spending, Psion Teklogix has not been
affected to date. Today Psion Teklogix
has announced a number of new contracts
for the deployment of wireless data
solutions including implementations of
its 802.11 wireless networking
technology.

As announced earlier this year, Psion's
Computers, Connect and InfoMedia
divisions have been consolidated into a
single division, Psion Digital, and its
costs reduced. The majority of
restructuring charges will be taken in
the first half. As anticipated in
March, trading in the Psion Digital
division, particularly in palmtop
markets, continues to be difficult.

In the second half of 2001, Psion
Digital will launch a variety of
Bluetooth-enabled products to take
advantage of the emergence of Bluetooth
handsets and peripherals.

Symbian remains an important strategic
investment for Psion. During the first
quarter of 2001, Symbian shareholders
contributed #20m in new equity funds,
Psion's pro rata share being #5.6m.
Symbian has delivered version 6.1 of
its platform to its licensees. However,
as Psion noted in March, industry-wide
technical and funding issues have
delayed the commercial implementation
of 2.5G networks and services.

ICV Edited News
END (SA)

11:01 May 04 2001

Steve ( kicking himself )

 

[Riz]

hehe...

Cheers Steve,

This baby has been nice to me more than you can imagine...did you manage to get in by the way?

Closed one long position at 120 for +38...decided to run the other one...

For the record PON went up +27.25 (26.4%) to 130.5 with a heavy volume of 11.3m...

Riz

 

[shelman]

I owe you one Riz.
It moved so fast i had to wait for the initial profit taking and got back in at 114.
I ended the day at about the same as if i'd kept the original position.
I sold half for safety but think there's more to come. Hope the Nas stays + on Monday... assuming they don't have the bank holiday... that would be something; the yanks celebrating Mayday.
Steve

 

[shelman]

Emailed to me today :-

Shares in Psion rose 13% today after it said it will not be issuing a much-feared profits warning and that its US division, now accounting for almost half the group's revenues, has been unaffected by the US slowdown.

Psion chief executive David Levin said: “Trading in Psion Teklogix, now Psion’s largest operating division following the successful acquisition and integration of Teklogix International, is on track. While risk in North American markets has increased with cutbacks on capital spending, Psion Teklogix has not been affected to date. Today Psion Teklogix has announced a number of new contracts for the deployment of wireless data.”

Psion Teklogix, a provider of mobile computing solutions and devices formed in September 2000 through the merger between Psion's Enterprise division and real-time mobile data solutions group Teklogix, specialises in wireless solutions for warehousing, distribution, transportation and logistics, and mobile data collection.
Psion paid £260m for Teklogix and the new division accounts for 45% of its group revenues.

Levin added that, as already anticipated, trading in the Psion digital division, particularly in palmtop markets, continues to be difficult. But it is expected that this business will improve with the long-awaited appearance of a new Psion handheld computer. Psion is determined to keep the design of the new product under wraps, but there are hopes among some City analysts that the company may finally abandon its historic loyalty to keyboard-centric clamshell devices and produce a screen-based product capable of competing with global market leader Palm.

Nomura analyst Keith Woolcock said: “The important thing about what was said at the AGM is that it indicates Psion is not about to issue a profits warning. Investors are drawing comfort from the fact that Teklogix seems to be holding up. Things should start to get better in the digital division with the launch of Psion’s new handheld computer in the second half of this year.”

Psion’s shares rose 13.25p to 120p on this morning’s announcement, falling back to 116.25p at luncthime, giving the company a market capitalisation of £479.3m.

S

 

[Riz]

hehe..

Glad to hear you lock more profit on this baby, Steve...we followed them long enough to deserve some profit after all...

Another good news for PON was that "Nokia said on Friday that 50 percent of all its third-generation (3G) high-speed mobile phone devices sold in 2004 would be based on EPOC operation system."

It's also worth to note that Nokia aims for 40% Mkt share..

The EPOC operating system was created by Psion and involves leading telecom equipment makers like Nokia, Motorola and Ericsson...it was Motorola's dropping plans to make a smartphone based on EPOC starting most concerns on symbian and therfore PON...

P.S. Just read your posts on bye bye footsie, *s don't matter, your point is clearly understood

Riz

 

[shelman]

just got this... i'm still holding ready to jump at 140ish. You're right Riz it could either way.
Steve

Mobile operators have decided to cold-shoulder the wireless technology Bluetooth. This could be bad news for Psion, which is pinning its hopes on the roll-out of Bluetooth-enabled products later this year.

It also takes some of the gloss off the news that broke at the end of last week that mobile phone maker Nokia will use Symbian's EPOC operating system on half of its third-generation mobile phones from 2004. Psion originally developed EPOC and holds 28% of Symbian, a unlisted company set up to promote EPOC. Nokia also holds 21% of Symbian.

Psion's revenues are more likely to be affected by the fact that its new Bluetooth-enabled product line is scheduled to appear in the second half of the year, at a time when the major operators say they will not be supporting Bluetooth.

BT and Vodafone have both said they will concentrate their resources on pushing GPRS (global packet radio systems), an interim technology that will bridge today's mobile phone services and those to be made available through the third-generation (3G) networks, currently being developed by the operators.

BT wireless spokesman Simon Gordon said: "We have been testing Bluetooth within the company and are looking at offering it to customers at some stage. But it is not on our test benches and there is no date for consumer deployment of Bluetooth. We have to channel our resources carefully and have been putting a lot of money behind GPRS."

Vodafone spokesman Jon Earl said: "We are not looking at offering Bluetooth-enabled handsets at the moment. We would have to see the technology establish a user base first."

Psion's digital division, which is expected to perform poorly in the first half of the year, is looking to its new Bluetooth-enabled product line in the second half of this year to rescue it. The strategy is to enable new Psion handheld computers to connect to mobile phones via Bluetooth. As the operators do not now intend support Bluetooth-enabled phones, this strategy now seems unlikely to be effective.

Mobile phone makers Ericsson and Nokia will still manufacture Bluetooth-enabled handsets but users will have to buy these at the full market price and then insert the SIM card from their existing phones.

In markets such as the UK, where mobile phones users are used to having the intial cost of their handsets subsidised by the mobile operator, this is unlikely to happen to any great extent. This will mean that most users will find it impossible to use Psion's new Bluetooth products in conjunction with their mobile phones.

Psion has seen its share price fall from a high of 1454p in March 2000. It gained 27.25p to raise it to 130.5p in the wake of Nokia's announcement regarding Symbian. Other news lifting Psion shares at the end of last week came from Malaysia, where Psion handheld computers computers will be used as part of a pilot project to computerise the country's classrooms.

 

[shelman]

Finally closed at 161.25 ... i just had to bank it.
Steve

 

[Riz]

Me too, Steve...at 158.5 for +39.5 (last position) ...thought it'd be best to give her a chance to retrace

For the record PON ended the day up +24.5 (18.8%) at 155 ...

Riz

 

[shelman]

My only nagging doubt is that the MMs allowed the price to rise steadily in line with the money flow... no tricks or manipulation. It made it easy to decide when to close but i'm wondering if it 's got a bit more mileage yet.
Lets hope we get another go.
Steve

 

[Riz]

Back in, Steve.. at 132.75, big stake again...it ended the day at 138.5...already in profit but prefered holding over week-end...couldn't stay away of this baby...
what do you think?

Riz